How to Spend Less on Contractors - Tips to Bring Your Construction Project in Under Budget
Updated: Sep 11, 2021
How do you spend less on contractors?
There are many stages of the contracting process, from shopping around to estimating, hiring, managing, (maybe firing!), and then close-out.
Here is a list of a few things you should do to protect yourself, client, or business:
Shop, Shop Around
Never go with the first estimate. This may seem like a no-brainer, but when you're eager to get started on it may be tempting to just hire the first contractor you talk to. It may take about 5 quotes to find a more realistic going rate for your project.
Go Over the Project Line by Line
Break down all of the costs.
Sometimes, contractors may assume you want things that you don't, and you may often find elements of the project that you could do yourself or put off until later when you have more money to play with.
When you go line by line through the budget, don't be shy about questioning anything that you don't understand. Your contractor may have assumed that you want something you actually don't care for! Take this opportunity to decide which parts of the project, if any, you want to take on yourself and discuss anything you want to source for yourself.
Do it In-House (if you are able)
What skills and time do you or your team have?
Do you have a buyer? Do you have a consultant, an engineer, etc.
Know what your skills are.
If you can do something yourself, then why take the time to look and hire?
But know what you're doing, as you may have to pay a contractor more to fix mistakes.
Also be very specific on what you agree with your contractor, redos or late finishes may hurt you if this isn't planned properly!
You may find materials much less expensive on your own than through your contractor.
If you want to source some of the materials yourself, just make sure you agree before the project gets started.
Don't wait until the project has started to decide what you want or don't want to source on your own. Instead, sit down with your contractor before the project starts, and go through the budget line by line.
You want to make sure you know when they will need each item on site, what the quantities need to be, and what the labor costs cover if they are putting anything together for you.
Unexpected hiccups may mean additional costs, so stay on top of your construction schedule.
For example, make sure you know what areas need to be clear and take care of that before workers arrive.
It's not cost-effective to pay workers to just stand around!
A good scheduling software may help greatly here (such as Primavera P6) in the hand of an employee or team dedicated to Contractor Management. For a larger job, you may have to provide accommodation for you, your team, or others during certain parts of the process.
Make sure you know this ahead of time!
Staying organized also means keeping up with any paperwork and staying on top of your contractor, if necessary. If your contractor is responsible for pulling permits, make sure you know what's due and when, so you can check to see that everything is properly permitted. If your city slaps you with a stop-work order, you may face costly delays in the project and possibly fines.
- Build During the Off-Season Fixing or replacing that roof in winter may save you 10 percent over summer. Like many industries, the construction business has busy and slow times each year.
You may save between 4 and 5 percent by starting your project when contractors tend to be slow.
On a more seasonal project, roofing, you may save as much as 10 percent by doing the work in the winter. Not only might you save money, but you also receive better service from your contractors during the offseason.
Since contractors are less busy, they may take more time to meet with you, answer your questions, and go through those budgets line by line (see below!) to see where you could save some cash.
Know When to Spend
Sometimes, saving a buck now will cost you in the future.
A contractor who gives you a lower cost per square foot may seem like a bargain, but sometimes this means substandard work.
When you're looking at quotes, maybe look at the middle of the road estimates from someone with good recommendations.
You're not really saving money if you have to redo the work in just a few years.
The same thing goes for sourcing materials. If you're redoing your project, don't choose the cheapest appliances.
Read reviews and choose efficient quality appliances that may last longer and help reduce your energy and water bills.
Opting for quality may cost more up-front, but how much did you really save if you have to replace or repair every few years? Not wasting money is great, but construction is an investment.
When you're trying to budget, it's sometimes easy to forget about resale value.
Consider your costs at every step!
Job Definition and Scoping
Invest time in defining and agreeing on the scope of work before contractors start.
Clear definitions, embedded into every document from the request for proposal to the final contract.
When contractors don't know what resources an effort will require, they may understandably plan for a situation that might be more demanding than normal.
For example, if a poorly-spaced welding effort could take anywhere from a few hours to a few days, contractors will likely set their compensation to reflect the longer timescale.
Definitions also make it less likely that contractors will carry out work that they assume is needed, but that hasn't actually been requested.
Such as cleaning the site when the client already has a janitorial-services contractor!
Let the company work more closely with contractors to manage shared costs. For example, for contractors to plan on the exact power tools and systems they would have to bring on-site at each stage so that people don't waste time looking for items later on.
Understand the work content
Ignorance isn't bliss: Instead, it may lead to a lot of waste.
Without a clear understanding of each job's work content, how can we analyze the contractor's price or recognize when it could be lower.
That's why the best managers make sure that their teams understand at least the basic content of all work.